Since the last few weeks, we have been hearing about the chaos created by the widespread Corona Virus across the globe.
With the deadly Virus is spreading pretty rapidly, the stock markets across the world and India took a tumble and we are experiencing new lows every day. The global and Indian markets have turned extremely volatile. A lot of negative news spreading all across via online/offline media.
However strong a person may be mentally and physically such an increased dose of negative information could grip us with shiver and fear about the worst hitting us especially when it concerns our health and/or wealth. This is one such phase where everything is seemingly going negative way.
This emotion is running high for all of us currently irrespective of, if we have just started accumulating investments or midway through or almost reaching our investment goal.
We would like to seize this opportunity to update you on our thoughts related to the coronavirus, its impact on the financial markets and on your wealth creation journey.
As you are aware, there are always two sides of a coin, one segment of the population believes worst is near while another segment has all logical reasons to seize this situation as the right opportunity to invest.
Every Bull & Bear market runs have some reasons associated with it, however, the key point always to remember is that Market Declines are momentary and Temporary but Market Advances are Permanent and are to stay. This means in the Bullish environment an emerging market like India will always see an upswing. The last 40 years data is an apt example. There have been several massive corrections and scams, but there has always been growth. There has never a lull after a storm, it’s always been upswing.
Today, courtesy the coronavirus a steep stock market selloff around the world is being experienced. As on date major market indexes in the US, Europe, Japan, and Australia are down 10% or more from recent all-time highs, according to The Wall Street Journal.
Two major reasons for driving this mayhem are :
Fear : This is a natural reaction. As humans, we are genetically made to react to situations that we feel are going to harm us. So currently the fear is driving the market, but you are aware that markets are volatile always and they just need a reason to start acting at rapid speed. This is time the reason is Corona Virus.
Valuations: Across the sectors, many stocks are already over-valued and it had been with such over-valuations. There was a need for them to be corrected and this Virus did it’s part in the markets to correct.
What we like to repeat is that, no one can predict the future, but certainly we can prepare for it. Will the market crash like 2008 or will it be a correction like 2011, only time will tell.
What are you supposed to do now with your investments? Actually do nothing, if you have been doing the following :
- Emergency funds to the tune of 6-12 months’ expenses are already there.
- All your next 2-5 years of financial requirements are well placed in moderately safe instruments.
- Your financial goals which are beyond 5 years from now are put into well-planned equity asset allocation.
Further, we in all our communications had categorically highlighted that there will be enough & more reasons in this journey to scare you and make you run away from equity investments but our investment plans have to be designed in such a way that next 5-6 years of life goals are not disturbed because of these events. If you have not planned till now, do register for a consulting call by clicking here.
If you have any excess money apart from your ongoing financial plan, this phase will be the perfect time to get into the equity via mutual fund SIP route in a staggered manner provided this money is not meant for any of your financial goals which may come up in next 5 years.
Do reach out to us for any questions, queries or fears that you have with respect to your investments. We are here to help you reach your wealth creation goal. Your financial well-being is our number one objective & priority.